Correlation Between Foxconn Technology and Kunyue Development

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Can any of the company-specific risk be diversified away by investing in both Foxconn Technology and Kunyue Development at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Foxconn Technology and Kunyue Development into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foxconn Technology Co and Kunyue Development Co, you can compare the effects of market volatilities on Foxconn Technology and Kunyue Development and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Foxconn Technology with a short position of Kunyue Development. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foxconn Technology and Kunyue Development.

Diversification Opportunities for Foxconn Technology and Kunyue Development

FoxconnKunyueDiversified AwayFoxconnKunyueDiversified Away100%
-0.14
  Correlation Coefficient

Good diversification

The 3 months correlation between Foxconn and Kunyue is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Foxconn Technology Co and Kunyue Development Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kunyue Development and Foxconn Technology is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Foxconn Technology Co are associated (or correlated) with Kunyue Development. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kunyue Development has no effect on the direction of Foxconn Technology i.e., Foxconn Technology and Kunyue Development go up and down completely randomly.

Pair Corralation between Foxconn Technology and Kunyue Development

Assuming the 90 days trading horizon Foxconn Technology Co is expected to generate 1.52 times more return on investment than Kunyue Development. However, Foxconn Technology is 1.52 times more volatile than Kunyue Development Co. It trades about 0.09 of its potential returns per unit of risk. Kunyue Development Co is currently generating about 0.08 per unit of risk. If you would invest  6,630  in Foxconn Technology Co on October 10, 2024 and sell it today you would earn a total of  1,140  from holding Foxconn Technology Co or generate 17.19% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Foxconn Technology Co  vs.  Kunyue Development Co

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -10010203040
JavaScript chart by amCharts 3.21.152354 5206
       Timeline  
Foxconn Technology 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Foxconn Technology Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Foxconn Technology showed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan65707580859095100
Kunyue Development 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Kunyue Development Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Kunyue Development may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan343638404244

Foxconn Technology and Kunyue Development Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.63-7.96-5.29-2.620.04452.75.498.2811.0713.87 0.020.040.060.08
JavaScript chart by amCharts 3.21.152354 5206
       Returns  

Pair Trading with Foxconn Technology and Kunyue Development

The main advantage of trading using opposite Foxconn Technology and Kunyue Development positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foxconn Technology position performs unexpectedly, Kunyue Development can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Kunyue Development will offset losses from the drop in Kunyue Development's long position.
The idea behind Foxconn Technology Co and Kunyue Development Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.

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